Corporate transformation

To reinvent a company, it's often the little things that matter the most



I have always been fascinated by language. New words and sayings not only enter our language at regular intervals, but they seem to sum up an era.

No PowerPoint presentation in the 1990s seemed complete without reference to the ‘paradigm shift’ that we were – supposedly – going through. That single phrase was what every company on the planet had to plan for. Similarly, a whole new industry opened up – called change management. Suddenly, we were told, the only constant is change. Trying to explain this change was the job of us, the communicators.  That challenge has defined my five years at Akzo Nobel – or AkzoNobel as we now officially call ourselves. The eradication of one blank space sums up an incredible amount of hard work, strategic thought and intense focus on change. As they say, it’s the little things that matter.

Total transformations 

Just when we thought we were ready to face the future and go back to what I call peacetime communications, we instead encountered another rollercoaster ride, as the worst economic crisis for several generations (and words like sub-prime entering our lexicon) has forced us, like virtually every other corporation, to revaluate our business strategy in response.

Managing change communication has always been a core competency of the corporate communication function, but never before has the ability to communicate change internally and externally been tested so thoroughly. It’s one thing to build reputation in a growth market; quite another to communicate a reorganisation in a downturn while helping to ensure that everyone remains focused on delighting customers, maintaining shareholder confidence, improving operational efficiency and motivating employees.

"It’s one thing to build reputation in a growth market; quite another to communicate a reorganisation in a downturn."

On top of this, corporate communication teams, like all corporate functions, are being asked to do more for less and focus on delivering now while also shaping the future. We are facing new and more complex business and communications challenges in an unpredictable environmnet. It’s a situation that is leading to many corporations to look at their change communication capability and how to address the communication challenges ahead. Having been through a near-total transformation over the last four years, I believe AkzoNobel is well set to communicate these latest changes effectively, internally and externally. So what lessons did we learn, and how will they help us into the future?

Akzo Nobel to AkzoNobel

When I joined the company late in 2004, a process was just starting. Relatively new CEO Hans Wijers hired me and a new senior vice president of human resources because he had a vision of transformation that was, as they say, total: he did not just want to look at what Akzo Nobel did, but how it did it too. First came structure.  We believed that the pills to paints conglomerate hid shareholder value, making the company too difficult to understand and complex to rate. The solution was to divest our Organon Pharma business, and the Intervet animal health business with it – but first Pharma needed to be fixed to make it ready for sale or flotation. 

This first stage of the transformation process itself presented change management challenges, as we had to motivate pharma employees about their future, and explain the process to the financial community. In the end, preparations for an IPO of Organon Biosciences proved unnecessary as the changes wrought in that business persuaded Schering-Plough to make an 11 billion euros cash offer for both human and animal health units – giving Akzo Nobel the financial freedom to deepen its leadership position in coatings by buying UK-based ICI. The eight billion pounds deal, which included a complex back-to-back sale of ICI’s National Starch activities to Henkel, added more than 20,000 employees to our existing 40,000 and 400 sites across the globe to our business. Change had presaged this too: we had to merge our previous two Decorative Coatings businesses into one before we could realistically add a new business like ICI. 

"This first stage of the transformation process itself presented change management challenges."

Post the acquisition, sell-offs of certain brands were required to meet regulatory concerns, and of course, we had to look at how to bring two very different cultures and operating systems together – but more of that later. Finally, the third element of our business – chemicals – was not immune from change either. In fact, we undertook a radical review of all our operating units here, resulting in a large number of divestments and the focusing of the chemicals business into five growth platforms for the future. So, in four years, we moved from being a highly diversified conglomerate to a tightly focused company with three Super Business Areas: Decorative Paints, Performance Coatings and Specialty Chemicals.

We are the world’s largest coatings company, the world’s largest decorative paints company, and a leading supplier of specialty chemicals. Moreover, while Akzo Nobel was always international, the addition of ICI’s businesses made us a truly global company. Our sales come from virtually every country on earth, but crucially we have started to shift the focus from tougher mature markets to high growth emerging markets, hence we are well placed to drive earnings and to lead consolidation, especially in the coatings sector.

Much more than structure

Behind all this has been a change of culture and a changed way of working. We have reinvented the role of AkzoNobel. From being purely a financial holding, the parent company has now evolved so that it supports the market-facing position of the Business Areas in areas such as HR, IT, Procurement – all through communications. Nothing reflects this more than our change of brand identity.

Some may question the validity of such an exercise but for me it is crucial. Never underestimate the power of the symbolic. Just as the arrival of spring sends people to their local DIY stores to buy paint to freshen some of the rooms of their house so does a new corporate identity signify renewal. For many, this is a way to move on, to signal another stage in their lives. For us, the modernisation of Bruce – the name we give to the man in our ID pointing the way to a new future – did not just signal our transformation, but it deepened it.

"Never underestimate the power of the symbolic."

Similar thinking was behind the choice of our new company tagline, Tomorrow’s Answers Today. While this is a promise to our customers, it is a challenge to our people. A challenge our senior leaders developed themselves as a result of discussions and working sessions led by the communications team over several months. The structural transformation of the company, we were saying, is not enough. To succeed in the future, we need to challenge each other more, to set higher targets, to be more fearless, more entrepreneurial. It was not – is not – good enough to think about what our customers, or society, needs today. If we are to be leaders, we need to look at what they will need tomorrow. When you begin to think about what that means, immediately it is a real challenge.

Change led by leaders

The response to a challenge of this magnitude must be led by the top of any business and so that is where we started, empowering our senior managers to become change leaders. In doing so, we transformed the role of the corporate communications team from deliverers of change messages to real change drivers. We applied Tomorrow’s Answer’s Today thinking to the design of our International Leadership Team conference to bring two cultures together and obtain the best of both worlds.

We challenged our leaders to take control of the future and create value by focusing on our customers’ futures first. Winning the support of lifelong industry veterans is no easy task but the case we put forward for change was undeniable, resulting in each and every participant putting themselves forward for this challenge and agreeing to lead their business units to meet it. A communication programme for 60,000 employees across 80 countries in eight languages surrounded the conference and brand launch event involving everyone in the discussion about Tomorrow’s Answers Today. A pre-launch campaign challenged existing ways of working and delivered a postbag with more than 20,000 employee responses.

"Winning the support of lifelong industry veterans is no easy task."

This was followed by a values programme engaging employees in living the values underpinning Tomorrow’s Answers Today: focusing on our customers’ futures first; embracing entrepreneurial thinking; developing the talents of our people; the courage and curiosity to question, and; integrity and responsibility in our actions. Our communications and business network ensured the majority of our global workforce had participated in a face-to-face meeting to discuss our new brand within a working day or two following the launch. The values programme is ongoing and includes initiatives tailored to an international and diverse workforce. Linked with business improvement initiatives, it is delivering tangible change in the business. 

Changing the change communicators

So our approach to communicating change has developed along with our transformation and the role of the corporate centre. Rather than being messengers of change, we now focus on being active contributors to achieving change itself. It requires challenging existing practices and working the blurred line between change communication and change management. Fulfilling this role has meant building our change communication capability by:

  • Restructuring the communication function, integrating internal and external communication expertise into a team structure that fits with our business structure
  • Maximising the role of leaders in change communication – at the corporate centre and within business units – by creating leadership communication plans designed to support our transformation and not simply report on it 
  • Focusing communication investment on those who really make change happen – our managers – and ensuring they truly understand the context for change and their responsibilities before being asked to deliver it
  • Building the change communication capability of our international communications network by sharing expertise, early involvement in the change process and through development initiatives
  • Acting as communication consultants to other corporate functions to ensure best practice is adopted and function-led change communications are aligned with the overall transformation
  • Putting in place communication channels that are rapid and flexible enough for the current pace of change
  • Partnering with external agencies experienced in the internal and external aspects of change communications

Looking outside

Of course, we have also had to communicate this change to our external stakeholders, which in my view is both easier, and more challenging, than communicating a transformation internally. Easier because the sheer emotion of change is a powerful factor for change internally – with positive and negative consequences. External stakeholders, no matter how closely they work with you, are never as emotionally engaged as employees and managers who may spend more time with their colleagues than they do with their families. They can accept a new positioning with more detachment. But this detachment also leads to the challenge. For many external stakeholders, the response might be “fine, but why should I care?”

Communicating the transformation of the company externally has therefore all been about relevance and impact. For our customers in decorative coatings, the new businesses we have bought and our refocusing have a very direct impact. We have begun to share ways of working, to share knowledge and innovations in ways that help our customers by making our products more attractive to consumers. But we also want them to feel a difference when they interact with AkzoNobel.

"Communicating the transformation of the company externally has therefore all been about relevance and impact."

So, for example, we changed our company magazine. Its editorial approach is now 100 per cent Tomorrow’s Answers Today. We want customers (and analysts) to be inspired by the magazine’s depiction of the challenges we set ourselves, and the breadth of the questions we are seeking to answer.

It is still early days, but this spirit of self-interrogation is also extending across the whole output of our external approach: to the speeches our senior executives give, to the stories we drive out to media and to the case studies we chose to illustrate our corporate website. Only this focus on achievement will make the transformation of the company relevant. Take sustainability: it is highly fashionable, and we cannot say we are the only company to have woken up to the importance of creating a sustainable company, not just for reputation value, but also to protect long term share-holder performance.

But I am willing to wager that few companies can have gone from a standing start (where we did not even produce a sustainability report in 2004) through to being one of the highest rated chemical companies on the planet, according to the DJSI. Nothing signals more than this the transformation we have wrought at AkzoNobel.

John McLaren

John McLaren is corporate director communications at AkzoNobel, the world’s largest coatings company and a leader in specialty chemicals, where he has been responsible for communicating the massive transformation at the company, including 27 billion euros worth of deals (divestment and acquisitions), and a complete rebranding of the company with a new global identity. He was previously vice president of corporate communications at DSM. He has also worked as director of corporate communications for News Network, the digital arm of News International.